When Handing Out Blame for the Manufacturing Skills Shortage, Look In the Mirror Too

We’re in the middle of a perfect storm with regards to finding the employees to design & build our way back to prosperity. With much of our higher-paying production – and the ancillary jobs that support it – offshored in the chase for cheaper labor costs, we’re caught with our pants down. As more and more OEMs and large manufacturers are realizing the total landed costs of offshored products & services, the will to reshore manufacturing is tempered by the lack of personnel to accept repatriated work.

I hear daily from manufacturing executives, managers, and C-suite suits what a national disgrace this is. That we have to do something. That we should have seen this coming. Well, I have a message for you all right now.

You’re right, and you helped cause this mess. So what are you gonna do about it?

I want you to consider a scenario, one that I’ve seen evolve in supply chains and manufacturing ecosystems throughout the US over the last 30 years:

Around 1980, a change was taking place that I witnessed in large manufacturing companies across several industries – pharmaceutical, aerospace, automotive, and defense.

Senior engineers with years of experience were in procurement and sourcing within these large firms. Their job was to act as liaisons between their indigenous engineering groups and the suppliers that would provide the parts and compnents to ultimately create final assemblies and products. These seasoned engineers – with shopfloor, design, production, and supply chain experience – ensured that the highest quality was obtained, from the best (re: dependable) source, at the right price. They actually knew the processes that were used to create the components and parts by the suppliers. They knew the suppliers businesses. They could sniff out – and predict – trouble before it happened.

But 2 things began snow-balling in the mid- to late-80s that neutered these extraordinarily valuable positions:

First, many of these older engineers began to retire. Perfectly understandable. Just the way things go. Except then …

Many, many of these large manufacturers began to see the supplier-management and sourcing positions as overhead, and they began replacing the highly talented predecessors with more and more inexperienced, inexpensive, recent graduates.

This gradual but real evolution – from recognizing and replenishing the talent these roles required to simply filling seats with procurement specialists that are motivated and measured more by myopic price points – has wreaked havoc on US manufacturing in ways you’ll never see portrayed in economic numbers or productivity statistics.

Total costs are rarely seen or appreciated by executives or the C-suite until they’re slapped upside the head with them. In the short term, they see costs on P&L sheets for divisions or departments and equate ‘improvements’ as shareholder value. That’s ‘Mission Accomplished’ to MBAs & economists.

But on the ground – within the shops and plants of their suppliers – massive waste occurs from this shift to less-qualified sourcing. Where fail-safes were in place to scrutinize tolerances, materials, ancillary processes, technology, and supplier fiscal health & prowess, price has become the primary motivator. The cost of everything, and value of nothing. Again.

There’s no question that there are many capable, talented engineers and sourcing professionals in US manufacturing in 2012. My point is, there are a heckuva lot fewer of ’em today. And it’s part of the skills problem that isn’t so easy to solve.

Don’t believe this is real? Stop in and visit with a small, competent manufacturer that’s been in business for 30 years (if you can find one near you) and ask them. I’ll bet you it won’t take much prodding to hear about their observations, the challenges, and the frustrations they see first-hand from this environment. You’ll hear that the technical savvy in the sourcing and procurement positions of their customers and prospects has declined significantly over this period.

If you choose to see this as a typical rant from an ‘old guy’ wishing for the good old days when we ‘didn’t know what WE KNOW NOW,’ that’s your prerogative.

But it’s no coincidence that the outsourcing and massive offshoring of our industrial base began at just about the same time as did our devaluation of sourcing in US manufacturing. How are you feeling now about those ‘justifiable’ initiatives from ‘back in the day?’

The fact is, we’ve over-commoditized the down-stream nodes in our supply chains in the name of lower costs, just like we offshored our production for the same, basic reason. We’ve done it via an overabundance of inexperienced sourcing agents in competition with the guy in the next cubical over who can squeeze prices down, and who don’t know the difference between electrical discharge machining and super-abrasive grinding – and don’t have the time to care. Which in turn shrinks the margins in the shops of their suppliers, thereby reducing the technical effectiveness on both sides of the fence.

In an environment like this, just who do you think these suppliers will have the money to hire, much less train?

So, thanks a lot. Your multi-million (or billion) dollar manufacturing company took the short-term view, and you now wonder how this could’ve happened?

I think it’s time we don’t just consider what caused our skills shortage and how to fix it, but also what role WE played in this degradation and how to keep it from ever happening again.